Years ago, I was speaking with a client about his business. Things were not good. His business was in a hole, the full extent of which he had only realised when he met with his accountant to run through the annual accounts. By then, it was about 6 months too late to become aware of the issue. He was being kept awake at night, worrying that it was too late to turn things around.
It was no surprise to me that this client had been caught unawares. Months earlier, he had struggled to answer me when I asked “What’s your monthly turnover?”, “What was your net profit last quarter?”, “last year?”. “Selina, I’m a designer,” he responded, “I don’t want to be bothered with all that stuff. That’s what my accountant is for”. Since that conversation, I have had many, many, many more like it with clients and colleagues.
Some people are inclined to revel in spreadsheets of financial numbers while others, like my client, would rather pluck every hair from their head than go near numbers. I know a lot of family lawyers who fall in the latter camp! Some have a very strong aversion to them, as though they were something dirty and counter to their ideals. Others just seem to prefer to be blissfully ignorant of them!
Keeping track of a few key numbers has been something I have done from the day I first started out on my own in practice. Now, I'm no math whizz. Balancing a chequebook was not my idea of fun. It just made sense to me that the numbers in my business didn’t just tell a story of what had happened in my business but that they also were a guide to what was going to happen. They were more valuable to me when used as a windscreen to the road ahead, than when used as a rear view mirror. I knew what numbers I needed to achieve particular results I wanted. I knew what I needed those numbers to be just to stay in business!
There is a reassuring certainty with numbers. They are solid predictors of what lies ahead if things don’t change. As they say, “the numbers don’t lie”. Even when you face rough times in your practice (and don't believe any family lawyer with a team of staff who tells you there are only good times!), the numbers are one thing you can depend upon.
As we face the economic fallout of lockdown and the pandemic, it seems to me that knowing the numbers in our practices is more important than ever. Maintaining an overview of them means you can quickly spot if things are going awry. If the numbers send out a warning, you can quickly respond to prevent finding yourself in a hole with my client and feeling its all too late. The energy, cost and time required for prompt responses can be a lot less than digging yourself out of a hole later!
Being all over the numbers isn't just for lawyers with lots of staff on their team. No matter the size of my practice, I’ve followed the numbers. When I’ve had larger teams, the numbers have helped reassure me I could pay them all! Even when working just on my own, the numbers serve to keep me accountable to myself and on target.
Some family lawyers seem to have an assured view that their practices are safe from whatever is going on in the wider economic world. People will always need family lawyers! We are not immune. There are already stories of redundancies in firms. If more people in our community are struggling financially, that will create a rise in legal aid eligibility or self represented litigants. Do the math. A colleague of mine recently told me his grandfather, who had been a lawyer, had told him stories of lawyers in the depression losing their practices and ending up working on the end of a shovel. Let's not be too assured of the certainty of our practices.
Sometimes, we can get comfortable in our earnings and not feel a need to dig into the numbers. However, the numbers may tell a story of how you can be just as comfortable and work less. If its important to you, they may tell you how you could even earn more for no more work.
Being all over your numbers doesn’t mean you have to slave over pages and pages of spreadsheets. When I set up my own business, one of the first books I read was Flourish & Prosper by the founders of Morgan & Banks. In it, they wrote about simply being passed a slip of paper every Friday afternoon with a couple of key numbers on it. I have someone on my team who loves tracking numbers, creating legendary spreadsheets and doing accounts. However, also having a good practice management system allows me to easily pluck out a couple of key numbers every week. Spending a bit of money on both saves me from being bogged down in a world of numbers pain and frees me to focus on what I prefer to be doing in my business.
Your numbers won’t be the only thing that is important to you in your business. Your sense of purpose, your professional satisfaction, the wellbeing of you and your team, being of service to your clients could all likely be important to you in your practice. None of those, however, can be achieved if you find yourself like my client at the beginning of this piece and, importantly, you can achieve more of those things if you’re watching and responding to your numbers.
Are you all over your numbers or do you break out into a cold sweat at the mere thought of them? I'd love to hear about your thoughts and experiences over in The Law Lighthouse Group's private Facebook page.